Stock-specific buying is likely to continue in the near-term, as the Q4 earnings season is in full swing. Even as Sensex had lost 36 points on Monday (30 April), the broader market was a picture of strength as select side-counters were in demand, either due to their strong Q4 results or on expectations of good earnings. The major Q4 result today is that of housing finance major HDFC.
The Union Budget 2007-08 is due to be passed by the Parliament today and the market will keep an eye open for any rollback measures from Budget Day (28 February 2007). The market will keep a close vigil on whether the finance minister rolls back the export duty on iron ore exports, which has hit shipments to China, and any changes to bring employee stock options plans (Esops) under the fringe benefit tax (FBT). However, as per one report no major changes are likely with respect to FBT on Esops.
FIIs turned sellers over the past two trading sessions after their heavy inflows over the past few days. FIIs sold shares worth a net Rs 195 crore on Friday (27 April), the day when the Sensex had plunged 320 points. Their inflow has been robust this month. As per provisional data, FIIs were net sellers to the tune of Rs 440.51 crore on Monday. Domestic institutional investors were net buyers to the tune of Rs 200.65 crore on Monday. The market was closed on Tuesday (1 May) and Wednesday (2 May) on acctoun of public holidays.
The outcome of the ongoing seven-phased Uttar Pradesh assembly elections, is a key political event to watch out for. The assembly poll gets over in early this month and the vote is seen as a barometer of national political trends. Some opinion polls show the opposition Bharatiya Janata Party (BJP) emerging second in the race, further adding to the woes of the ruling Congress, which is already battling rising prices.
Global markets remain firm. Asian markets edged higher on Thursday (3 May) after US stocks hit fresh record high on Wednesday. Key benchmark indices in Hong Kong, Japan, South Korea, Singapore and China were up by between 0.28% to 2%.
US stocks rallied on Wednesday, as robust profits and a flurry of buyout offers powered the Dow Jones industrials to a record high and the S&P 500 to its highest level in over six years. Shares of manufacturing companies that sell their products abroad, such as appliance maker Whirlpool Corp. and lawn mower maker Toro Co., posted sharp gains after government data showed bigger-than-expected increases in US factory orders. The Dow Jones industrial average was up 75.74 points, or 0.58 percent, at 13,211.88. The Standard & Poor's 500 Index was up 9.62 points, or 0.65 percent, at 1,495.92. The Nasdaq Composite Index was up 26.31 points, or 1.04 percent, at 2,557.84.
Strong factory orders and deal news coupled with lower crude price takes US Market once again to unchartered territory
Deal making news, good economic data and a carryover of momentum took the US market to unchartered territory once again today. US stocks once again rallied on Wednesday and set a new milestone with the Dow crossing and settling above the 13,200 mark for the first ever time. For the 17th time this year the Dow closed in record territory. S&P 500 struck a new six and half year high record and is just 5 points away from touching the 1500 mark.
25 out of 30 Dow stocks closed higher for the day. For the day (2May, Wednesday) the Dow Jones Industrial Average closed higher by 75.74 points at 13211.88, Nasdaq higher by 26.31 points at 2557.84 and S&P 500 higher by 9.62 points at 1495.92. American Express, Du-Pont, GM and Verizon were the main Dow winners while IBM, Johnson & Johnson and P&G were the main Dow losers.
Yesterday’s news about Rupert Murdoch’s bid for Dow Jones was followed today by another deal news in media sector. Cablevision Systems has agreed to be taken private by the founding Dolan family in a deal worth $10.5 billion. Cablevision stock closed up by almost 10%.
Factory orders rise 3.1% (expected 2.2%) in March; Yum Brands and Chipotle deliver yummy results
Stocks rallied straight out of gate as a carryover of yesterday’s momentum. The indices were extending their reach to the upside as all 10 economic sectors remained positive and Consumer Discretionary was pacing the way, getting a big lift from Restaurants after Yum! Brands beat analysts' expectations and raised its 2007 earnings outlook last night. Chipotle Mexican Grill also posted good earnings report.
Then came some good economic data. News that factory orders rose 3.1% in March, ahead of the 2.2% expected by Wall Street economists, reassured investors about economic growth. At the same time, the market overcame a pre-opening report from ADP, which said private-sector jobs rose by only 64,000 in April, the weakest monthly growth in four years.
Technology was another influential leader to the upside. Cisco Systems surged 3% after Goldman Sachs urged investors to buy the stock ahead of its Q3 earnings report next Tuesday. Financials was also in focus after Dow component American Express climbed noticeably up after competitor MasterCard posted a blowout earnings report.
Crude prices slumps on second consecutive buildup in crude inventory
Crude-oil futures for light sweet crude for June delivery closed at $63.68/barrel (lower by $0.72/barrel or 1.12%) on the New York Mercantile Exchange. Crude prices fell today on U.S. government weekly report that refiners increased gasoline output and there was a second weekly rise in crude inventories. As per today’s inventory report, the Energy Department said that crude supplies rose 1.1 million barrels for the week ended 27 April. After a two-week climb of 3.2 million barrels, total inventories stood at 335.6 million last week.
In the broad market for equities, trading volumes showed 1.6 billion shares exchanging hands on the New York Stock Exchange and 2.1 billion on the Nasdaq stock market. Advancing issues topped decliners by 3 to 1 on the NYSE and by 20 to 9 on the Nasdaq.
The economic reports expected for tomorrow are Q1 Productivity and an update on Initial Claims followed by ISM Services data. Also, tomorrow brings another large batch of quarterly results, among which GM is one major name.